Nick Baldick: 527 backing John Edwards in 2008 kept clean

5/8/12 7:51 AM EST

GREENSBORO, N.C.—Testifying Monday at the trial of former Sen. John Edwards, D.C. political consultant Nick Baldick insisted that the pro-Edwards 527 he ran in the 2008 election cycle, Alliance for a New America, obeyed federal campaign finance laws and didn't illegally coordinate with Edwards or his campaign.

Former Edwards aide Andrew Young, the prosecution's star witness, testified earlier in the case that Edwards claimed to have arranged a pay hike and set in motion about $240,000 in fundraising commission payments Young's wife Cheri received in late 2007 and 2008 as Young was helping to hide Edwards's pregnant mistress Rielle Hunter from the press.

However, called by the prosecution to the witness stand on Monday, Baldick said flatly he never discussed with Edwards the pay hike or the six percent commission Young was paid for raising $3.5 million for the 527 from wealthy heiress Rachel "Bunny" Mellon.

Assuming Baldick's account is correct, that appears to leave only a few possibilities: Edwards falsely claimed credit for the payments in order to try to keep Young in line at a highly sensitive time for Edwards's 2008 presidential campaign, or Young either misremembered or was lying about the conversation.

Baldick also said Monday that the unorthodox way Young's commission payments were made, to Young's wife instead of him directly, was because Young had legal concerns about being on the Edwards campaign payroll while also receiving monies from the 527 group, which under federal law is not permitted to coordinate its activities with the campaign.

Baldick said he had legal advice that the coordination rules did not apply to fundraising activities. "We told him the lawyers said it was fine," Baldick recalled. The rules "on coordination are about communications and messaging, not about fundraising."

However, Young remained concerned, so Baldick agreed to pay Young's wife the fundraising commission, even though she had not done any fundraising.

"Cheri was his wife. I didn't think it had tax consequences," Baldick said during cross-examination by the defense. Baldick said he didn't notice that there were gaps in the numbers of the invoices, even though it seems doubtful Young's wife would have needed to invoice anyone other than Baldick.

Baldick, who was Edwards's campaign manager in 2004, seemed to go out of his way Monday to underscore that his 2008 527 venture was playing by the rules.

When defense lawyer Abbe Lowell said to Baldick that he must have known in late 2007 that Edwards's campaign was in trouble because he was sagging in the polls and he was being outorganized by the better-funded Clinton and Obama campaigns, Baldick quibbled.

Edwards "was behind in the polls. I didn't know if he was being out-organized," Baldick said. His distinction appeared to emphasize that the 527 was not permitted to coordinate with Edwards's campaign on such matters.

The 527, A lliance for a New America, effectively hid many of its expenditures from public disclosure in 2007 and 2008 by paying out more than $3 million to a limited liability corporation, AFNA LLC, the Associated Press reported last year.

While the transactions were closely scrutinized by prosecutors, none of the five felony charges Edwards faces relate to the 527.

An attorney for Baldick, Jim Lamb, told the AP last year that Baldick was informed he was not a target of the investigation. Through his firm Hilltop Public Solutions, Baldick remains a consultant in Washington, doing grassroots lobbying work and advising political campaigns. Baldick also testified Monday that he opted not to run the senator's 2008 campaign in part because of concerns that Edwards seemed to be having a continuing sexual affair with Hunter.

A prominent GOP campaign finance lawyer, Jan Baran, said Monday he had concerns about the legal advice Baldick said he got that a campaign employee could solicit large donations for a 527. Baran noted that the McCain-Feingold law prohibits federal candidates from asking for donations in excess of federal limits of $5000. He said a campaign staffer could be viewed as an agent of the candidate and, therfore, subject to the same limitation.

"The ban on soliciting soft money was a [Bipartisan Campaign Reform Act] change. John Edwards was a co-sponsor of the McCain-Feingold law and spoke eloquently on the floor of the Senate about getting big money out of politics. He must have forgotten the rules he helped pass by the 2008 campaign," Baran said.

Lamb did not respond to an e-mail from POLITICO Monday night seeking comment on the issue.